Japanese Prime Minister Masayoshi Ohira yesterday told key congressmen that Japan's global trade account had slipped into deficit by about $1 billion in the first 20 days of April, while its surplus with the U.S. had been narrowed to a mere $100 million.
Administration sources shrug these figures off as relatively meaningless. "I assure you it won't last," one U.S. official said.
Last year, Japan's trade surplus with the world was about $26 billion, approximately half of it with the United States. These large deficits have been the source of increasing tensions between Japan and its Western world customers.
Ohira conceded that "the big question" is whether this turnaround in Japanese surpluses is temporary, or whether "the momentum will be maintained." But in meetings on Capitol Hill and with the administration officials, he reiterated a pledge to take actions to restore a better balance in U.S.-Japn economic relations.
Moreover, Ohira won the applause of members of the House Ways and Means Committee and the Senate Finance Committee by saying bluntly he understood the political pressures that have pushed some congressmen into favoring protectionist steps against Japan.
Ohira was quoted as saying: "I recognize that the anxiety of your nation over large Japanese surpluses can be translated into protectionist sentiment.
"If I were an American congressman, and were faced with that kind of imbalance, I would support an import surcharge (against Japanese goods), too."
Ohira's open acknowledgement of the reality of the problems between Japan and the United States was also warmly received at a Blair House breakfast he hosted for Treasury Secretary W. Michael Blumenthal and other high U.S. officials.
Rep. James Jones (D-Okla.), chairman of a Ways and Means Subcommitee on trade, said after the meeting withe the Japanese prime minister that "the protectionist sentiment is still there."
But Jones added that "we were really pleasantly surprised by the full extent of his understanding not only of the economic issues, but of our political problems. I think that there is new hope and optimism that the problems will be solved."
Jones, however, warned Ohira that the problem relating to procurement by the Nippon Telephone and Telegraph Co. "had to be solved." He also brought up a new problem, relating to the semi-conductor industry.
As in other electronics industries, Jones said, the Japanese strategy is to protect their own semi-conductor market while pouring large amounts of money into research and development. "Then, when the R & D has delivered for them, they explode onto the world market." Ohira pledged to look into the matter.
Participants at the Blair House breakfast agreed that the most significant step forward in this week's talks is that under Ohira, the Japanese accept the reality of the ecnomic problem instead of denying its existence. But Ohira warned the Americans that it will take time to bring Japanese public opinion along.
Both at the breakfast meeting and in response to a question after a speech to the National Press Club, Ohira expressed concern over the recent drop in the exchange rate of the Japanese yen.
Since last November, the Japanese yen has depreciated about 20 percent against the dollar, partially reversing the trend which had made Japanese goods more expensive in world markets, thus reducing the Japanese trade surplus.
He said at the Press Club that Japan had hoped to keep the Japanese yen around 200 to the dollar. But recently, the yen has been much cheaper around 224 to the dollar.
"We can't remain with folded arms if the situation continues as it is," Ohira said. He added that international cooperation is needed to stabilize the yen, but did not give specifics.
Ohira delivered his speech to the Press Club in English, to the appreciation of a large audience. He pledged not only to work for "a more open and freer world trading system," but promised to "emphasize enchancement of the quality of our people's lives, particulary the improvement, of public and social-welfare facilities."
Ohira leaves Washington today for a one-day stay in New York, followed by a day in Los Angeles Saturday. He returns to Japan on Sunday. CAPTION: Picture, From left, Rep. Rhodes, Prime Minister Ohira, Rep. Zablocki and Speaker O'Neil at House hearing yesterday. By James K. W. Atherton-The Washington Post